ServiceNow beat second-quarter earnings expectations and raised its full-year guidance on strong AI demand, with the company reporting adjusted earnings of $0.90 per share versus the consensus estimate of $0.86, and subscription revenue reaching $3.877 billion, up 24.5% year-over-year.
Total revenues came to $3.987 billion in Q2 2026, representing 24% year-over-year growth. The company’s earnings beat every topline and profitability metric, according to CEO Bill McDermott, who credited the company’s “AI Control Tower as the market standard” and noted that “agentic deployments of ServiceNow AI increased ninefold in just nine months.”
Management raised full-year 2026 subscription revenue guidance to between $15.755 billion and $15.770 billion at the midpoint, representing 21% constant-currency growth, up from the prior guidance range. The company also disclosed that ServiceNow AI crossed $1 billion in annual contract value in the quarter, a milestone that underscores the rapid adoption of its generative AI capabilities across enterprise customers.
Current remaining performance obligations—contract revenue expected to be recognized within the next 12 months—hit $13.20 billion as of June 30, a 21% increase from a year earlier. ServiceNow reported 123 transactions over $1 million in net new annual contract value in Q2, growing nearly 40% year-over-year, and ended the quarter with 658 customers with more than $5 million in annual contract value, representing approximately 23% year-over-year growth.
The earnings beat reflects broader enterprise appetite for AI-powered business software. ServiceNow’s subscription revenue growth of 24.5% significantly outpaces the broader software sector. The company’s AI revenue target was raised to $1.5 billion in June, up from the prior $1 billion target, as demand for its Now Assist platform and other AI products accelerated.
CFO Gina Mastantuono said the company “beat the high end of our guidance range across every topline and profitability metric,” and highlighted that “AI net new ACV growth continues to outpace expectations.” She noted that the AI Control Tower is “supercharging our Security and Risk business,” while IT Operations Management is seeing strong demand for the Configuration Management Database as an AI governance foundation.
ServiceNow operates under the “Rule of 56,” combining subscription revenue growth and free cash flow margin, and management indicated it is “well on our way to the Rule of 60” by 2030. The company targets $30 billion or more in subscription revenue by 2030, with 30% of annual contract value expected to come from AI products. Long-term stock-based compensation is targeted to fall below 10% of revenue by 2029.
The company’s strong Q2 reflects deepening partnerships with cloud and infrastructure providers. ServiceNow surpassed $1 billion in AWS Marketplace transactions and expanded integrations with Microsoft Agent 365. The company also launched new AI capabilities including ServiceNow Otto, a unified AI experience combining Now Assist, Moveworks, and AI Experience to complete work across departments.
Sources
- Business Wire — ServiceNow Q2 2026 earnings announcement, subscription revenue, guidance raise, AI ACV milestone
- Investing.com — Full-year 2026 subscription revenue guidance details and constant-currency growth rate
- MarketBeat — Q2 2026 EPS beat and analyst consensus figures
- Yahoo Finance — Q2 2026 revenue and earnings beat confirmation
- Reuters — Current remaining performance obligations and guidance raise details
- Seeking Alpha — AI platform adoption and market positioning context
- Zacks — AI revenue target increase to $1.5 billion
